The following table summarizes the results of a poll (hypothetically) taken of CFA charter holders and CFA candidates regarding the importance of a continuing education requirement after the CFA designation is obtained:
Given the information that a member of the group is in favor of a continuing education requirement, what is the probability that she is a CFA candidate?
There are 415 members of the group in favor of the continuing education requirement. 180 of these are candidates, so the probability is 180 / 415 = 43-37%. Note that this question is quite similar to those where we apply Bayes’ Theorem. The priors here are the probabilities that a member of the group is a charter holder or is a candidate. Both of these are 1,000 / 2,000 = 50%. Given the information that the member of the group favors continuing education, we can update the probability that that group member is a candidate to 43.37%